Dividends are calculated by averaging fund results over a five-year period. Although last year was profitable, it wasn't as good as 2000, which falls out of the mix and which saw better realized earnings - or profits on investments sold.

Another factor working to reduce dividends is an expected increase in qualified applicants.

Last year, each eligible Alaska man, woman and child received a dividend of $919.84. This year's dividend is expected to be slightly smaller, perhaps below $900.

The permanent fund is invested mainly in U.S. and foreign stocks and bonds as well as real estate.

Last year, real estate was the star performer with better than a 24 percent gain. Overseas bonds and stocks returned 15 percent and 10 percent respectively, while U.S. bonds and stocks each returned about 7 percent.

Burns noted that the year saw two periods of flat and downward markets but that permanent fund trustees stuck with a steady investment plan and didn't make changes based on short-term market conditions.

"This strategy has paid off," Burns said.

Almost every year since 1985, the fund has posted a gain, often in the double digits. The exceptions were 2001 and 2002, when the fund lost 3.3 percent and 2.2 percent respectively.